U.S. stocks led by Oracle's rise; S&P 500 hits record high on favorable inflation data

Oracle 30% surge, Nvidia·AMD·Broadcom also rise in unison

A week before the Federal Reserve's rate policy meeting, U.S. producer prices for August unexpectedly fell, and Oracle's bullish AI investment outlook propelled markets, sending U.S. stocks to another record high on the 10th (local time).

At 10:10 a.m. Eastern Time, the S&P 500 reached an all-time high, up 0.6% at 6,552 points. The tech-heavy Nasdaq also rose 0.5% to 21,968 points, marking a record high for the second consecutive day. Only the Dow Jones Industrial Average fell 0.1%.

The headline producer price index (PPI) released that morning surprised markets by falling 0.1%, strengthening expectations for rate cuts and turning bond yields downward.

The 10-year Treasury yield fell 1 basis point (1bp=0.01%) to 4.059%. The 2-year yield was 3.519%, down 2.3bp from the previous day.

The dollar was little changed, and spot gold traded at $3,648.15 on the New York Mercantile Exchange, up 0.6%.

After the previous day's close, Oracle provided stronger-than-expected booking guidance in its cloud computing business, sending Oracle shares soaring 31% and leading gains among AI-related stocks.

With concerns that AI-related investment had peaked easing, Nvidia (NVDA) shares rose 3.4% that day. Advanced Micro Devices (AMD) was up 3.2%, and Broadcom (AVGO) gained more than 6%.

Apple's shares fell for a second straight day, down 2.4%, despite the iPhone 17 new model announcement.

Video game retailer GameStop said its second-quarter net sales of hardware and accessories exceeded analysts' estimates, after which its stock rose nearly 6%.

With producer prices falling for the first time in four months, investors are pricing in three rate cuts this year.

According to CME Group's FedWatch, the interest-rate swap market is pricing the chance of a 25bp cut at next week's Federal Open Market Committee (FOMC) meeting at 88.1% and the chance of a 50bp cut at 11.9%.

The producer price index for August fell 0.1% month-on-month, and July's figure was slightly revised down.

David Russell of TradeStation said, "The worst-case inflation scenario is not unfolding."

However, he noted, "The pace and magnitude of rate cuts will be more influenced by the consumer price index (CPI) to be released tomorrow."

According to Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, options traders expect the S&P 500 to move within a roughly 0.7% two-way range after tomorrow's CPI report. This is below the 0.9% average realized CPI volatility over the past year and below the expected volatility for the next jobs report to be released on October 3.

How much U.S. companies pass tariff burdens on to consumers is expected to be a key factor determining the direction of rates this year. Experts expect the core price index, excluding food and energy, to rise again on a monthly basis.

Stephen Brown of Capital Economics analyzed, "The August PPI decline is due to compressed trade margins, and the weakness is exaggerated following a reversal of the unexpected July rise."

Federal Reserve Chair Jerome Powell cautiously hinted at the possibility of rate cuts at last month's Jackson Hole symposium. Last week's Labor Department national employment data showed the U.S. labor market is on the verge of a downturn while increasing expectations about how much the Fed will cut rates this year.

Ulrike Hofmann-Burchardi of UBS Global Wealth Management predicted, "A 25-basis-point cut is expected in September, followed by three consecutive cuts of the same size through January 2026."

Against this backdrop, she maintains a positive view on high-quality bonds and said she prefers medium-duration Treasuries. UBS expects the S&P 500 to finish near the 6,600 level this year and reach 6,800 by the end of June 2026.

Contributing reporter Kim Jeong-a kja@hankyung.com